The multifamily sector is on track for at least two more years of strong sales, according to Scotsman Guide. Although rental growth has slowed and increases in vacancy rates are expected, the market continues to perform well, and will likely continue to do so.
Apartment rents rose by 6.3% on a national basis, and are expected to fall to about 4.4% growth this year, according to Yardi Matrix.
This continued strength means that now is a great time to broker loans for borrowers looking to finance multifamily properties.
Here’s what you’ll need to submit to a small-balance commercial mortgage lender to get the process started:
A completed 1003 or commercial application:
Before you do anything else, you and your borrower need to completely fill out a 1003 or a similar application. Your lender needs this form to be completed so that they can evaluate your borrower’s commercial financing request in a timely manner and avoid multiple requests for missing information.
A credit report and explanation:
As we’ve mentioned time and again, a tri-merge credit report with trade lines is best, but a simpler report will generally be enough for an initial review. Make sure that the report has at least one score and includes trade lines. Provide explanations for any financial bumps your borrower has experienced.
A loan submission summary:
The small-balance commercial lender will need to understand why your borrower needs financing and how they will benefit from these funds before they can approve an application. You should also include some basic information about the multifamily property, such as how large it is, how much your borrower earns in rent, how many tenants are currently occupying the property and the vacancy rate. Read more about working with non-traditional lenders.
As the multifamily sector continues to perform well, commercial mortgage brokers should continue to work with borrowers looking to purchase or refinance these properties. It’s as simple as submitting a completed application, a credit report and a loan submission summary. Whether you’re a residential broker looking to increase your product offerings or a commercial broker who sees the occasional small-balance deal, these mortgages are a great way to earn additional income.